Please assist with the attached document. The Board of Pizza One wants to evaluate the pricing strategy for one-topping large pizzas and they think varying the price on a regular basis is an unnecessary hassle. The Board only wants to vary the price for one-topping pizzas based on whether or not the university is in session and whether or not a high-profile sporting event is occurring in a given week. You are given the attached data and variable definitions, along with the knowledge that the firm has $4,000 in weekly fixed costs. You are then asked to determine the price of one-topping large pizzas that will maximize profit under these four combined scenarios. This will require estimating demand and cost functions and making some assumptions. The following issues/questions should be addressed within your executive report and presentation.
1.What are your recommended prices for one-topping large pizzas (when the university is in and out of session and in weeks with and without high-profile sporting events) and what do you expect Pizza One's weekly profit to be in these four scenarios?
a.If these prices are consistent with historical prices, explain why the board should accept your recommendation of only minor change.
b.If these prices are not consistent with historical prices, explain why the board should accept your recommendation of radical change.
2.Explain the process you went through to determine your demand function.
a.Provide rationale for each of the variables included in the demand function.
b.Explain whether the coefficient estimates are statistically significant and whether the sign on the coefficient estimates are what you expected.
3.Provide rationale for all of the assumptions that were made to determine the appropriate monthly rates.
4.Explain what changes could occur over the next year that would alter your recommended prices.
5.Do you agree with the board's decision to only focus on the price for one-topping large pizzas and to only let this rate vary when the university is in and out of session and in weeks with and without high-profile sporting events? Explain your rationale and provide suggestions if you disagree.
Ba ound Pizza One is one of over two dozen pizza parlors in the metropolitan area of Daille, a mid-sized city in the U5. Midwest. Pizza Cine prides itself on being the highest quality pizza in the local market and adverses its fresh ingredients and brick oven cooking process. Fifty percent of Pizza Une's business comes from students at the local university. The restaurant is within one mile from campus, approximately four miles from the city center, and within 1i] miles of i096 of the population of metropolitan Daygille. It competes to some extent with all of the restaurants in Daygille, however, its biggest competitors are Papa's Pizza and Cousin's Pizza. Papa's also makes a high quality piaa and CDmpEE'E with Pizza Cine for higher income locals in Dam'lle. Ililousin's is a much lower quality pizza and attracts much of the college crowd. Management Directives The Board of Pizza Dne wants to evaluate the pricing strategy for onetopping large pizzas and they think varying the price on a regular basis is an unnecessarly hassle. The Board only wants to vary the price for onetopping pizzas based on whether or not the university is in session and whether or not a high-prole sporting event is occurring in a given week. You are given the attached data and variable denitions, along with the knowledge that the rm has $4,003 in weekly fixed costs. 'i'ou are then asked to determine the price of onetopping large pias that will maximize prot under these four combined scenarios. This will require estimating demand and cost functions and making some assumptions. The following issuesfquestions should be addressed within your executive report and presentation. 1. What are your recommended prices for onetopping large piuas {when the university is in and out of session and in weeks with and without highprole sporting events] and what do you expect Pizza Dne's weekly prot to be in these four scenarios? a. If these prices are consistent with historical prices, explain why the board should accept your recommendation of only minor change. b. If these prices are n_ot consistent with historical prices, explain why the board should accept your recommendation of radical change. 2. Explain the process you went through to determine your demand function. a. Provide rationale for each of the variables included in the demand function. b. Explain whether the coefcient estimates are statistically significant and whether the sign on the coefcient estimates are what you expected. 3. Provide rationale for all of the assumptions that were made to determine the appropriate monthly rates. 4. Explain what changes could occur over the next year that would alter your recommended prices. 5. Do you agree with the boards decision to only focus on the price for onetopping large pizzas and to only let this rate vary when the university is in and out of session and in weeks with and without high-prole sporting events? Explain your rationale and provide suggestions if you disagree. Q P1 Number of one-topping large pizzas sold at Pizza One in a given week P P1 Average price for one-topping large pizzas sold at Pizza One in a given week P PP Average price for one-topping large pizzas sold at Papa's Pizza in a given week P CP Average price for one-topping large pizzas sold at Cousin's Pizza in a given week Session Binary variable with 1 indicating weeks when the university is in session Weather Number of days in the week with severe weather Unemployment Number of unemployed workers in the state as of the first day of each week Holiday Binary variable with 1 indicating a national holiday in that week Sports Binary variable with 1 indicating weeks with high profile sporting contests (Super Bowl, World Series, etc) TotalAd Amount spent on local advertising each week (in hundreds) Age 65+ Number of residents in Dayville aged 65 years and older (in hundreds) TVC Total Variable Cost - total variable cost associated with the number of pizzas sold each week
